Gabe Industries sells two products, Basic models and Deluxe models. Basic models

Question

Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for S41 per unit with variable costs of $20 per unit. Deluxe models sell for $46 per unit with variable costs of $40 per unit. Total fixed costs for the company are $1,221. Gabe Industries typically sells five Basic models for every Deluxe model. What is the breakeven point for Basic models and Deluxe models? (Round any intermediary calculations to the nearest cent and your final answers to the nearest whole unit.) A. 0 B. ( C. ( D. 35 units of Basic; 46 units of Deluxe 1 1 units of Basic; 55 units of Deluxe 55 units of Basic; 11 units of Deluxe 46 units of Basic; 35 units of Deluxe

Explanation / Answer

Unit contribution margin Basic model = 41-20 =$21 Unit contribution margin Deluxe model = 46-40 =$6 Weighted contribution margin=(21/6*5)+(6/6*1)= 18.5 Overall breakeven point = 1221/18.5= 66 Basic model = 66/6*5 = 55 Deluxe model = 66/6*1 = 11 Option C is correct

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